With cash running out and scant progress in talks, election scenario looms

Greece faces another critical week with looming debt repayment obligations and the resumption of tough talks on a proposed list of reforms with the country’s international creditors amid renewed speculation about the possibility of a Greek default or an early general election.

Government officials sought to ease concerns over the weekend with reassurances that Greece is in a position to honor its debt to the IMF and to continue paying salaries and pensions. On Wednesday, Greece is to auction 1.4 billion euros in Treasury bills in a bid to raise the equivalent amount of debt maturing a week later though only about half that amount is held by foreign investors who are unlikely to participate in the sale. And on Thursday, it must repay a 450-million-euro debt to the International Monetary Fund. Even if it meets these two challenges, coffers must be replenished for subsequent obligations.

But, as talks with the creditors have been progressing at snail’s pace, there is very real concern about when a deal can be reached to allow the release of at least a portion of a pending 7.2-billion-euro loan tranche.

As Greek officials and creditor representatives remain far apart in talks, and divisions within the government remain over potential concessions, there are few hopes that a deal will be reached in a two-day session of the Euro Working Group due on Wednesday and Thursday. According to sources, the government is aiming to secure some progress in those two days of talks and a deal on the technical level by April 19, which would mean an agreement could be reached at a Eurogroup summit scheduled to take place in the Latvian capital of Riga. A lot of ground must be covered over the next two weeks if a deal is to be reached. At a Euro Working Group carried out by teleconference last week, one eurozone official lashed out at his Greek peers, Kathimerini understands, telling them: “It’s been nine weeks since the elections and you’ve done nothing.”

According to sources, the European Commission has shown the most understanding. Indeed, the EC is said to have suggested that eurozone governments cover Greece’s repayment to the IMF on Thursday before discovering that such a move would not be legal.

Greek Finance Minister Yanis Varoufakis was to meet with the head of the IMF, Christine Lagarde, in Washington on Sunday for “an informal discussion on the reform program of the Greek government,” the ministry said.

The list of proposed reforms has not satisfied creditors, who are said to be insisting on Greece approving at least some privatizations to raise revenue. There is a chance that pension and labor sector reforms could be postponed until later if Greece pushes through other revenue-raising measures now, Kathimerini understands. But that will require Prime Minister Alexis Tsipras clashing with radicals in his government such as Energy Minister Panagiotis Lafazanis, who repeated over the weekend that the government should honor its pre-election promises.

In view of the internal political strife and the impasse with creditors, Tsipras has been advised to consider calling a referendum or new general elections in June or even sooner, Kathimerini understands.

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